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May 6, 2008

Wikipedia: Samsung

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Samsung Group
삼성
三星
Type Public (traded on the Korea Stock Exchange)
Founded 1938
Headquarters Seoul, South Korea
Keypeople Lee Byung-chul, Lee Kun-Hee
Industry Conglomerate
Revenue $142 billion (2005)
Net income $9.5 billion
Employees 229,000[1]
Slogan Imagine the Possibilities

The Samsung Group is South Korea‘s largest conglomerate (chaebol) and a global multinational corporation leading several major industries. It is composed of numerous businesses, including Samsung Electronics, the world’s largest electronics company,[1] Samsung Heavy Industries, one of the world’s biggest shipbuilders and Samsung Engineering ‘ Construction, a major global construction company. These three businesses form the core of Samsung Group and reflect its name — the meaning of the Korean word samsung is “tristar” or “three stars”. Samsung Group has a corporate responsibility for South Korea, forming a vital core part of the South Korean economy, accounting for more than 20% of the nation’s total exports. The company has a powerful influence on the country’s economic development, politics, media and culture. Many Koreans take Samsung Group as a symbol of National Pride and businesses use its international success as a role model, with the company being known as ‘Another Family’ or ‘Our No.1 Brand’ in South Korea. Samsung Group is South Korea’s largest company and exporter, the 5th largest transnational corporation in the world and is helmed by chairman Lee Kun-Hee; the third son of the founder, Lee Byung-chul.

Contents

History

1950s – 1980s

  • 1950: Byung-Chul Lee founded Samsung trading company in Seoul (YPM).
  • 1953: Samsung starts sugar production, which has since been spun off into the CJ Corporation.
  • 1958: Samsung starts insurance business.
  • 1963: The first Shinsegae department store opens in Seoul.
  • 1964: Samsung starts Tongyang Broadcasting Company(TBC), which later merged with KBS.
  • 1965: Samsung starts the Joong-Ang Ilbo daily newspaper, which is no longer affiliated with the company.
  • 1969: Samsung Electronics was founded.
  • 1974: Samsung Petrochemical and Heavy Industries were founded.
  • 1976: The company was awarded an export prize by the government as a part of the country’s development program.
  • 1977: As a result of this export prize, Samsung Construction emerged. In addition, Samsung Shipbuilding is formed.
  • 1982: Samsung establishes a professional baseball team.
  • 1983: Samsung produces its first computer chip: a 64k DRAM chip.
  • Towards the end of the 1980s, Samsung pushed its efforts in petrochemicals and electronics.

Samsung means “three stars” in Korean. Lee Byung-Chull founded Samsung in 1938. It started as a small trading company with forty employees, located in Seoul. The company did fairly well until the Communist invasion in 1950 which caused great damage to his inventories. He was force to leave and start over in Suwon in 1951. In just a year, the company’s assets had grown twentyfold. In 1953, Lee created a sugar refinery—the South Korea’s first manufacturing facility after the Korean War. “The company prospered under Lee’s philosophy of making Samsung the leader in each industry he entered” (Samsung Electronics). The company started moving into service businesses such as insurance, securities, and department store. In the early 1970s, Lee borrowed money from foreign companies to begin the mass communication industry by launching a radio and television station (Samsung Electronics).

South Korean President, Park Chung-Hee’s regime during the 1960s and 1970s helped Samsung Electronics and many other Korean firms. Park put great importance in increasing economic growth and development, and assisted large, profitable companies, protecting them from competition and aiding financially as well. His government banned several exterior companies selling consumer electronics in South Korea. “To make up for a lack of technological expertise in South Korea, the South Korean government effectively required foreign telecommunications equipment manufacturers to hand over advanced semiconductor technology in return for access to the Korean market” (Samsung Electronics). This enormously helped Samsung to manufacture the first Korean dynamic random access memory chips. “Furthermore, although Samsung Electronics was free to invest in overseas companies, foreign investors were forbidden to buy into Samsung” (Samsung Electronics). Samsung quickly thrived in the domestic market.

Samsung Group later formed several electronics-related divisions, such as Samsung Electron Devices Co., Samsung Electro-Mechanics Co., Samsung Corning Co., and Samsung Semiconductor ‘ Telecommunications Co., and grouped them together under Samsung Electronics Co., Ltd. in 1980s. Its first product was a black-and-white television set (Samsung Electronics).

In the late 1980s and early 1990s, Samsung Electronics invested heavily in research and development, constructing the company as a leader in the global electronics industry. “By the 1980s Samsung was manufacturing, shipping, and selling a wide range of appliances and electronic products throughout the world” (Samsung Electronics). In 1982, it built a television assembly plant in Portugal; in 1984, it built a $25 million plant in New York; and in 1987, it built another $25 million facility in England (Samsung Electronics).

In 1993 and in order to change the strategy from the imitating cost-leader to the role of a differentiator, Lee Kun-Hee, Lee Byung-Chull’s successor, sold off ten of Samsung Group’s subsidiaries, downsized the company, and merged other operations to concentrate on three industries: electronics, engineering, and chemicals (Samsung Electronics).

Samsung became the largest producer of memory chips in the world in 1992. In 1995, it built its first liquid-crystal display screen, eventually equalizing its technology to Sony’s (Lee kun-hee).

Samsung has also tried hard to improve its international image. It has spent more than $6 billion since 1998 on marketing, sponsoring the last five Olympics and erecting a large video sign in Times Square in 2002 (Lee kun-hee). Samsung is very involved in the Asian Games, contributing Samsung Nations Cup Riding Competition, Samsung Running Festival, Samsung World Championship, and still many more around the globe (Samsung Electronics).

The 1990s and present

Burj Dubai Tower

The 1990s saw Samsung rise as an international corporation. Not only did it acquire a number of businesses abroad, but also began leading the way in certain electronic components. Samsung’s construction branch was awarded a contract to build one of the two Petronas Towers in Malaysia in September 1993 and the Burj Dubai in 2004, which is the tallest structure ever created by mankind. In 1996, the Samsung Group reacquired the Sungkyunkwan University foundation.

Compared to other major Korean companies, Samsung survived the Asian financial crisis of 1997-98 relatively unharmed. However, Samsung Motor Co, a $5 billion venture was sold to Renault at a significant loss. Most importantly, Samsung Electronics (SEC) was officially spun-off from the Samsung Group and has since come to dominate the group and the worldwide semiconductor business, even surpassing worldwide leader Intel in investments for the 2005 fiscal year. Samsung’s brand strength has greatly improved in the last few years. Considered a strong competitor by its rivals, Samsung Electronics expanded production dramatically to become the world’s largest manufacturer of DRAM chips, flash memory, optical storage drives and it aims to double sales and become the top manufacturer of 20 products globally by 2010. It is now one of the world’s leading manufacturers of liquid crystal displays and next generation mobile phones.

Samsung Electronics, which saw record profits and revenue in 2004 and 2005, overtook Sony as one of the world’s most popular consumer electronics brands, and is now ranked #20 in the world overall.

By late 2005, Samsung had a net worth of US$77.6 billion.

Price fixing

On November 30, 2005, Samsung pled guilty to a charge it participated in DRAM price fixing collusion during 1999-2002 that damaged competition and raised PC prices. In a deal with prosecutors, Samsung Electronics Co. Ltd. and its U.S. subsidiary, Samsung Semiconductor Inc., were to pay a $300 million fine. As a result of this investigation, Hynix was to pay $185 million in 2005, and Infineon $160 million in 2004. Micron Technology, the US firm who initiated the case, cooperated with prosecutors and no fine is expected. Also, five Samsung executives along with four executive each from Infineon and Hynix and one from Elpida and one from Micron technologies received a prison sentence with the longest being 10 months by Young Hwan Park, president of Samsung Semiconductor Inc.[2]

In October 2006 Samsung was again subpoenaed for an industry wide investigation in price fixing SRAM, along with Mitsubishi, Sony, Toshiba, and Cypress Semiconductor.

Criticisms

To this date, Samsung maintains a strict “no labor union” policy (무노조 정책 munojo jeongchaek) inside Korea, by closely monitoring workers and sometimes establishing “ghost labor unions” to prevent the creation of real ones.[3][4] (Under Korean law, a company can have at most one labor union.) Although this has drawn intense criticism from Korean labor activists, many conservative media, including Joongang Ilbo with its close ties with Samsung group, actually views this as a case study of why labor unions are bad for economy and should be suppressed at each company’s discretion (because Samsung has been immensely successful as a company).

Recently (2007), a large number of consumers are complaining to Samsung Electronics after they found out that some LCD tvs, PC monitors and laptops they have bought under the Samsung name are actually built on mostly inferior Taiwan and China-made LCD panels. Several Samsung LCD tv and monitor models, including the 20-inch XL20 model and the LE32R8 LCD tv, are built on non-Samsung panels either because the company does not produce that specific size, or because it is more affordable.[5]

Markets

Currently, Samsung has sixteen products that have dominated the world’s market share, including: DRAM, color cathode-ray tube TVs (CPT, CDT), SRAM, TFT-LCD glass substrates, TFT-LCD, STN-LCD, tuner, CDMA handset, color television (CTV), monitor, flash memory, LCD Driver IC (LDI), PDP module, PCB for handheld (mobile phone plates), Flame Retardant ABS, and Dimethyl Formamide (DMF). [citation needed]

Plus in the Television market, Samsung and LG make the only screens for LCD TFT televisions and then later sell them on to the other companies.

According to Interbrand and BusinessWeek, Samsung’s brand value ranked 43rd (USD 5.2billion) in 2000, 42nd (USD 6.4 billion) in 2001, 34th (USD 8.3 billion) in 2002, 25th (USD 10.8 billion) in 2003, 21st (USD 12.5 billion) in 2004, and 20th (14.9 billion) in 2005 among top global companies.

In terms of export that directly contributes to the Korean economy, Samsung took up 18.1% of the all exports with USD 31.2 billion in 2000 and 20.7% with USD 52.7 billion in 2004. In addition, Samsung’s tax payments to the Korean government in 2003 was KRW 6.5 trillion, which is about 6.3% of total tax revenue.

The market value of Samsung in 1997 reached KRW 7.3 trillion in 1997, which amounted to 10.3% of the Korean market but this figure increased to KRW 90.8 trillion taking up 22.4% in 2004.

Moreover, the annual net profit of Samsung marked KRW 5.8 trillion in 2001, KRW 11.7 trillion in 2002, KRW 7.4 trillion in 2003, and KRW 15.7 trillion in 2004, showing forth a steady increase.

In order to enhance the working environment and build a strong and trustworthy foundation, the semiconductor sector of Samsung Electronics has been conducting a ‘Great Workplace Program’ called GWP since 1998. Then, in 2003, GWP has spread throughout the entire Samsung Group as Samsung Fire and Marine Insurance, Samsung SDI, Samsung Everland, Samsung Corporation, Cheil Industries, Samsung Networks, and others started to apply its core principles. In 2006, 9 subsidiary companies of Samsung Electronics, 80 overseas branches, and 130 overseas business sectors have reported that they are actively applying the GWP.

Dramatic surge in Net Profits starting in the late 90’s: $2.2Bil (1999), $7.3Bil (2000), $8.9Bil (2002), $11.8Bil (2004).

Samsung’s Brand Value conducted by Interbrand of the world’s top 100 brands: $6.4Bil (2001), $8.3Bil(2002), $10.8Bil(2003), $12.5Bil(2004), $14.9Bil(2005).

Market Capitalization (Ratio to the total market value of all Korean listed stocks):A dramatic increase from 7.3 trillion KRW, 10.3% of the total national listing value in 1997. At the end of 2004 national listing value in 22.4%.

Samsung’s Annual Profits Growth: $4.5Bil (2001), $8.9Bil (2002), $5.6Bil (2003), $11.8Bil (2004) and Debt-to-Equity Ratio Decrease: 104% (2000), 78% (2001), 68% (2002), 56% (2003), 51% (2004).

Circular investment

The relations of Samsung companies are very complicated. According to the Financial Supervisory Service of South Korea, Samsung Everland owns 13.3% of Samsung Life Insurance; Samsung Life Insurance holds 34.5% of Samsung Card and 7.2% of Samsung Electronics, as well as more of other Samsung companies; Samsung Electronics in turns keeps 46.0% of Samsung Card and stocks of other Samsung companies; and finally, Samsung Card holds 25.6% of Samsung Everland.

The family of Lee Kun-hee owns 40% of Samsung Everland, whilst Samsung Card holds 25.6%, and related people have another 30%. Thus it is thought that Lee controls 95% of Samsung Everland. Control of one company, through the circular investment, enables the Lee family to control other Samsung companies despite having only relatively minor holdings.

Lawsuits against the company

According to reports, Samsung was sued in 2006 by companies 20th Century Fox, Paramount Pictures, Time Warner, Walt Disney, and Universal Studios. The big five US movie studios claims that one of Samsung’s DVD players can be used to avoid encryption technology.

A Samsung spokesman “guessed that the film makers take issue with DVD-HD841, which Samsung sold in the United States between June and October 2004. If so, I do not know why the movie studios are complaining about the products, of which production was brought to an end more than 15 months ago. We stopped manufacturing the model after concerns erupted that its copy-protection features can be circumvented by sophisticated users.”

Sports sponsorship

Samsung owns the professional soccer club Suwon Samsung Bluewings and the baseball team Samsung Lions, in South Korea.

Samsung signed the second biggest sponsorship deal in English football history with Premiership member Chelsea. Their five-year deal is estimated to be worth £50 million.

The company sponsors the rugby league team the Sydney Roosters in the Australian National Rugby League 1995-1997 2004-present.

It also sponsors the Melbourne Victory football club in the Australian A-League. The deal with Victory is also believed to be the largest in Australian club football history.

Also, Samsung supports Sport Club Corinthians Paulista in Brazil’s Série A. Besides Corinthians, Brazil’s subsidiary sponsors the Officer Motorsports racing team, which participates in the Brazilian Stock Car championship. Other [sports sponsorships of Samsung Brazil] are the football league of Rio Grande do Sul (‘Campeonato Gaúcho’), the Samsung Masters (golf) and the Samsung 10K (running).

Samsung was an official partner of the Rio 2007 Pan American Games.

Samsung is a sponsor of the April NASCAR Nextel Cup race at Texas Motor Speedway, the Samsung 500. This sponsorship, initially with RadioShack from 2002-2006, was in doubt after the 2003 race because of NASCAR’s ban on wireless telecommunication sponsors effective the 2004 season, but was grandfathered into the Nextel contract. (Nextel uses exclusively Motorola equipment.) However, after Sprint’s merger with Nextel, the ban was rescinded for Samsung, because of Sprint’s sale of Samsung products.

Samsung also sponsors Show Jumping’s Nations Cup Super League since 1996.

Samsung is a Worldwide Olympic Partner for since 1997 in the Wireless Communications category.

Samsung has been active in endorsing video game competitions, serving as a sponsor for the World Cyber Games. In the popular PC Game StarCraft, Samsung sponsors a professional team known as Samsung Khan.

Subsidiaries of the Samsung Group

Electronics industries

Machinery and heavy industries

Chemical industries

Financial services

Retail services

Engineering ‘ construction

Entertainment

Others

See also

This text comes from Wikipedia. Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation; with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts. For a complete list of contributors for this article, visit the corresponding history entry on Wikipedia.

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